Long-term obligations are scheduled to mature beyond one year (or the operating cycle, if applicable) from the date of an enterprise's balance sheet.
Assessing whether a short term obligation is expected to be refunded: Historically, two approaches.
a. Enterprise intent and its prior ability to refinance.
a. Post balance sheet date issuance of a long-term obligation or equity securities.
b. Financing agreement. Before the balance sheet is issued, the enterprise has entered into a financing agreement that clearly permits the enterprise to refinance the short-term obligation on a long-term basis on terms that are readily determinable and all of the following conditions are met:
i. the agreement does not expire within one year (or normal operating cycle) from the date of the enterprise's balance sheet and the agreement is not cancelable by the lender or prospective lender or investor except for violation of a provision with which compliance is objectively determinable or measurable.
ii. no violation exists at the balance sheet date and no available evidence indicates that a violation has occurred thereafter but prior to the issuance of the balance sheet, or if one exists at the balance sheet date or has occurred thereafter, a waiver has been obtained.